The Week of February 8 – February 12, 2021

Macro Update

• For the U.S., the National Federation of Independent Businesses (“NFIB”) Small Business Optimism Index fell to 95.0 (lowest since May 2020), vs an expected 97.0 & 95.9 in December 2020. Small businesses account for roughly 50% of employment in the U.S. The decline in the NFIB index rhymes with the surge in the ‘long-term’ unemployed in the latest U.S. employment report; they are now 39.5% of the total. Members of this group were likely formerly employed by businesses that have been closed. This offers a glimpse into the permanent damage inflicted by the pandemic on the U.S. economy.
• U.S. weekly jobless claims eased to 793,000 vs 812,000; but still high.
• According to Pew Research – Of those who are unemployed, 49% are either somewhat or very pessimistic about future job prospects; since being unemployed, 66% have considered changing their occupation/field of work.
• U.S. January Consumer Price Index (“CPI”) +0.3% month over month (in line with expectations) vs. +0.4% in December. Core CPI (excluding food and energy) came in flat (much lower than expectation of +0.2%) vs +0.1% in December; y/y core inflation was unchanged, compared to +1.4% prior. While the prices of financial assets, housing, food and commodities are rising, the prices for services are falling. Historically, prices for services are much stickier than prices of goods and commodities. The outlook for inflation is still very tame.
• The U.S. Census Bureau found out from one of their surveys that only 22% of recipients of stimulus check had spent it. Others either saved it or used it to repay debt (money circulation stopped). This is one of the many symptoms of the falling velocity of the circulation of money.
• Incoming economic data continue to establish a lower base from which the expected recovery could build on. Thus, most economic forecasts are likely too optimistic. At the same time, there are encouraging developments from limiting the virus spread and more vaccine varieties; to balance out against concerns of new variants of the coronavirus. Ironically, such positive developments are softening the political resolve behind the $1.9 trillion stimulus package proposed by President Biden.

William Chin, MBA

Portfolio Manager & Chief Technical Analyst

William Chin, Chief Technical Analyst for Caldwell Investment Management Ltd. (“Caldwell”), is the lead Portfolio Manager on the Tactical Sovereign Bond Fund and Portfolio Manager for the fixed income portion of the Caldwell North American Fund (formerly Caldwell Balanced Fund). He also advises fixed income portfolios for affiliate Caldwell Securities Ltd.’s separately managed account platform and contributes to the Caldwell Investment Management Ltd. team’s research, specializing in macro-economics, currency risk management and technical analysis. William is a member of Caldwell’s Investment Risk Committee.

William has over 35 years of international investment experience in the areas of portfolio, currency risk and treasury management. He began his career in the currency market, progressing to the role of treasury manager for a large international bank. He was first registered as a Portfolio Manager with the Ontario Securities Commission in 1999 and managed high net worth client portfolios on a discretionary basis prior to joining Caldwell.
William has an MBA in economics and international finance. He has been a volunteer and a board member for the Canadian Society of Technical Analysts since 2001 and is their former President (2012-2014).

William is a frequent speaker on macro analysis, monetary policy and technical analysis.

All data is sourced from Thompson Reuters and Capital IQ as of February 12, 2021 unless otherwise indicated. While believed to be reliable, the accuracy of the information cannot be guaranteed. Caldwell Investment Management Ltd. and its affiliates make no representations or warranty as to its completeness, reliability or accuracy.

Investment involves risk, uncertainty and assumptions. The value of investments rise and fall such that there is a risk you may not recoup your original investment. Past performance is not a reliable indicator of future performance.

The views expressed herein of those of the portfolio manager and not necessarily those of CIM. Such views, while based on current market conditions and information, are subject to change without notice such that there can be no assurance that actual results will not differ materially from such expectations. The views expressed are an illustration of broader themes and intended to be for general information purposes only. They should not be relied upon nor construed as investment advice. Readers are expected to consult with their investment advisor for advice specific to their circumstances before making investment decisions.

Forward-looking statements are not guarantees of future results as they involve uncertainties and assumptions; there can be no assurance that actual results will not differ materially from expectations.